I was annoyed by a recent post to Slashdot. It references an article that makes the claim that the iTunes App Store (which sells applications for the iPhone and iPod touch) is hurting developers because of the pricing model that’s allowed. Basically, the pricing model is open. Applications must be approved before Apple will list them but you can price them between $.99 and $999.99 (or they can be free). Developer’s are apparently whining that with the availability of cheap (usually $.99 applications) it’s hard to support serious development.
The request is that Apple “do something” to fix this.
This is bizarre. The claim is that because so many free or cheap applications have flooded the market, no one can compete. The analysis looks at cost to bring an iPhone application to market and the expected sales depending on its price.
Maybe the problem is simply that iPhone users aren’t willing to drop as much money as developers would like. Maybe the current glut of free and cheap apps is a poor anticipation of actual demand by the developers. Some developers made free apps, sold the idea and hooked users and then migrated to $1 or $5 applications. These developers are making SOME money. Maybe not a lot, and maybe the iTunes App Store will never be a lucrative business for developers (although Apple seems to be doing quite well).
The success that small programming outfits have had is that they can leverage a nice API to work with that users can use in novel ways. At $1, many users are willing to buy without recognizing a brand name or being suspicious of a poorly made product. For independent software developers, this is probably enough to pay the bills. For larger products, the source of income is likely to be in the form of some integrated service (free iPhone application that interfaces with a $40 desktop application).
I don’t see the dilemma. Isn’t this what the free market is all about? If customers aren’t willing to pay $20 for most applications for the iPhone, maybe developers shouldn’t make them. On the other hand, if developers really can make a much more complex product with almost universal appeal, then even pricing it at $1 or $5, it will almost surely pay for the higher development costs. This is the way the world works.